Companies highlight divide between policy wonks and industry

Vietnamese EV firm VinFast said it became ineligible for incentives designed to attract foreign carmakers because it started investing in the country before the scheme was notified.

“That policy was drafted when we were considering entering India. Now, our cars are rolling out from our Indian factory,” Pham Sanh Chau, chief executive officer of Vinfast Asia, said on the sidelines of the automaker’s official launch in India on Saturday. The top executive added that the pace of policymaking does not match the pace of investment decision-making at companies.

VinFast signed a memorandum of understanding with the Tamil Nadu government in January 2024 to set up an integrated EV plant in the state. Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) was approved in March 2024 and was notified more than a year later, in June 2025.

It allows EV companies to import a limited number of vehicles at reduced customs duties if they invest a minimum of ₹4,150 crore in the country and meet domestic value-added requirements.

VinFast is not the first to raise concerns about how the government has chosen to implement its key schemes. Electric two-wheeler maker Ather Energy also echoed its concern over how the production-linked incentive (PLI) scheme for the auto sector excludes small companies.

Not a level playing field

Ather’s co-founder and chief executive Tarun Mehta plea to the government has also been backed by Euler Motors, a commercial EV maker. Saurav Kumar, founder and CEO at Euler Motors, told Mint that a more inclusive approach is needed for PLI.

“As we continue investing in homegrown R&D, scaling manufacturing to build from India for the world – we believe there is an opportunity for the an inclusive PLI framework to support innovation-led startups like ours where 100% of business is about growing the EV business,” Kumar said.

Since June this year, Mehta has repeatedly highlighted in public social media posts and media interviews that the PLI scheme needs to be inclusive. Ather is currently ineligible because it does not have ₹10,000 crore of group revenue.

“The Auto PLI scheme should now look to reward innovative startups to drive faster innovation, create jobs, and boost EV adoption nationwide,” Mehta told Mint earlier during an interview.

“While the scheme has already propelled several sectors forward, it now needs to include newer, innovative startups in the EV space like ours to drive the Make in India initiative,” he added.

“That’s where inclusive PLIs make a difference. They lower barriers, bring more players into the game and strengthen the local supply chain,” Mehta said in a post on X in June. Mehta highlighted the concern again after Ather’s annual event last month.

With its rivals getting PLI benefits, the Bengaluru-based startup said it is not on a level playing field due to technical reasons.

Under the PLI-Auto scheme, companies shortlisted by the government have to get specific electric vehicle models approved to get incentives ranging from 13% to 16% of sales value. Ola Electric, Tata Motors, Mahindra & Mahindra, Hero MotoCorp, TVS and Bajaj Auto have all got approvals under the PLI scheme.

However, disbursals have been lukewarm so far. The central government planned to dole out almost ₹26,000 crore under the PLI-Auto scheme to incentivise the manufacture of zero-emission vehicles but received a lukewarm response in its first year – four companies filed claims of ₹332 crore in FY25.

Moreover, the scheme to attract foreign carmakers has not attracted any applications yet. In June, heavy industries minister HD Kumaraswamy said that Mercedes-Benz, Kia, Hyundai and Skoda-Volkswagen had shown interest in the policy.

However, Mercedes has since then ruled out applying under the scheme. Tesla has not announced its intention to make vehicles in India.

With the clean vehicle policies waiting to take off, some observers suggest the government can look to be more accommodative to industry concerns and demands.

“For the government, it is a complex question but some demands by players who have invested heavily in infrastructure can be considered as there is room to allocate more funds,” said Abhishek Saxena, former policy expert at Niti Aayog. “Two things need to be done in parallel. First, companies who were originally included in the PLI list but who have not invested anything need to be removed. Second, those who have done work on the ground and have invested significant amounts can be included. But the government can also not admit companies on a rolling basis, so maybe a window for consideration can be opened again.”

Queries sent to the heavy industries ministry on 8 September remained unanswered.